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Michael Kern

Michael Kern

Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com, 

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Positive Economic Data Pushes Oil Prices Higher

Oil prices were higher on Tuesday morning as hopes of China reopening combined with news that the consumer price index had climbed by less than expected in November.

Oil price

Riig

Rig

Chart of the Week

Crude

- The 622,000 b/d Keystone pipeline running from Alberta, Canada into the US Midwest has been halted for almost a week already after a 14,000-barrel oil spill in Kansas. 

- Market differentials of Canada’s heavy Western Canadian Select have fallen some $5 per barrel since the outage, currently trading at a -$30/barrel discount to WTI as the off-take pressure grows on Canadian producers. 

- The Keystone pipeline has leaked almost 26,000 barrels of oil since 2010, the most of any other pipeline in the given period.

- Keystone’s extension into the Marketlink pipeline system towards Texas has allowed Canadian producers of heavy crude to export their barrels from Gulf Coast terminals, with outflows reaching some 300,000 b/d recently, up until the oil spill. 

Market Movers

- German energy conglomerate Siemens Energy (ETR:ENR) is reportedly considering selling part of the company to Qatar, which could make the Middle Eastern kingdom a co-owner in Siemens Gamesa, the world’s second-largest wind turbine manufacturer. 

- US oil major ExxonMobil (NYSE:XOM) completed the sale of its operations in two Central African countries – Chad and Cameroon – to UK-based upstream firm Savannah Energy (LON:SAVE) for $407 million.

- The same Savannah Energy (LON:SAVE) also bought Petronas’ producing assets in South Sudan for $1.25 billion, triple the company’s current market cap, prompting a halt in the company’s trading. 

Tuesday, December 13, 2022

The US consumer price index increased by 7.1% year-on-year in November, a better-than-expected result that breathed some life into the market. Yet even with Brent testing the $80 per barrel threshold, news of China postponing its closed-door Central Economic Conference (where some had expected an announcement regarding the easing of its Covid policy) and of clinics swamped by long queues of people exhibiting coronavirus symptoms doesn’t bode well for a quick demand recovery.

China Wants More Oil Trade in Yuan. China’s President Xi Jinping has called on Arab leaders to buy oil and gas in Chinese yuan, calling their countries natural partners, as last week’s China-Arab League meetings overshadowed US President Biden’s visit five months ago.

IEA Warns of Gas Shortage in Europe. The International Energy Agency has warned that the EU could face a gas shortage of up to 30 bcm in 2023 if Russia cuts its remaining pipeline deliveries and Chinese demand rebounds from lockdown-induced lows.

Are We Nearing a Fusion Energy Breakthrough? The US Department of Energy is to announce Tuesday that scientists from the Lawrence Livermore National Laboratory in California have achieved a net energy gain from fusion energy for the first time in history.

Chinese Shipyards Enjoy LNG Bonanza. With the order book of South Korean shipyards swamped by Qatar’s expansion plans, Chinese docks have ratcheted up the market share of new LNG orders massively as three shipyards won nearly 30% of this year’s record 163 orders for new LNG carriers.

IMF Sees Iraq with Lower Oil Dependency. The International Monetary Fund (IMF) has called on Iraqi authorities to use this year’s windfall profits towards economic diversification, with the country’s GDP expected to grow 8% in 2022 and the fiscal breakeven level dropping to $66 per barrel.

France’s Nuclear Generation Saves the Day. Electricity generation from France’s nuclear reactors surpassed the 40 GW mark for the first time since March 2022 as the country confronted the Europe-wide cold snap, with prolonged corrosion repairs gradually coming to an end. 

EU Members Seek to Soften Methane Rules. Only a few weeks after the COP27 summit, it was reported that several EU countries are trying to weaken the bloc’s pledge to cut methane emissions in the oil and gas sector, with Romania and Hungary claiming it would be too difficult to end routine gas flaring immediately. 

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Investors Still Flee Oil Futures. For the fourth consecutive week, investors have been reducing their positions in key oil futures and options contracts, selling the equivalent of 30 million barrels in the week ending December 6, bringing the total sell-off tally to 221 million barrels over the four past weeks.

WTO Finds US Steel Duties Violate Trade Rules. A World Trade Organization panel found that the US import duties of 25% on steel and 10% aluminum established in March 2018 by then-President Trump are inconsistent with international trade obligations and recommended scrapping them. 

Saudi Arabia Doubles Down on Giant Gas Field. Saudi Aramco (TADAWUL:2222) is reportedly seeking equity investors that would help fund its 110 billion drive to develop the unconventional resources of the giant 200 TCf Jafurah gas field, expected to become a blue hydrogen feed by 2030.

UK Puts Coal Plants on Alert. The UK National Grid has asked two contingency coal-fired power plants to be ready to send more electricity to the grid if needed as the Europe-wide cold snap led to an increase in demand amidst lower wind generation rates. 

Argentina to Connect Vaca Muerta to Brazil. Argentina has secured financing of $689 million from the Brazilian state development bank BNDES to build a new gas pipeline that would supply natural gas from the vast Vaca Muerta shale play northwards to Brazil.

Lithium Toxicity Issue Saps Europe Production Plans. As the European Commission’s scientific arm recommended that Brussels classify lithium as toxic, stymieing potential production across the continent, the EU’s executive arm has pushed back the decision on the issue into 2023.

By Michael Kern for Oilprice.com

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